The Journal. - How Intel’s CEO Became a Political Liability

Episode Date: August 13, 2025

President Trump has called for the resignation of Intel’s CEO, Lip-Bu Tan. Tan played a key role in building up China’s chip industry, earning him the nickname “Mr. Chip.” Now his ties to China have opened him up to criticism, just as he’s struggling to turn Intel’s business around. WSJ’s Stu Woo explains how Tan attracted the President’s attention, and what it says about the ongoing U.S.-China tech rivalry. Annie Minoff hosts.Further Listening: - The Chip Business Is Booming. Why Isn't Intel?- Why Washington Went to Wall Street to Revive the Chips Industry - The U.S. Wants American-Made Chips. Can Intel Deliver?Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Last week, the CEO of Intel, one of America's most storied tech companies, was asked to resign. But it wasn't Intel's board calling for him to step down. Intel has now found itself in the crosshairs of President Donald Trump. After the president called for the company's CEO, Liputan, to resign, calling him, quote, highly conflicted due to his ties to Chinese firms. Lip Bhutan, Intel's CEO, has only been in the job for about five months. The focus on him seems to have started last week. That's when Republican Senator Tom Cotton, a longtime China Hawk, posted a letter on X. It was addressed to Intel's board.

He sent a letter to Intel saying, hey, I have some questions about your CEO. That's our colleague, Stu Wu. Specifically, this guy runs America's most prominent chip company, but he seems to have a lot of ties to the most important chip companies in China. And we want to know, have you asked him about that? Have you looked into this? Trump's Truth Social Post, calling for Tahn's resignation,

followed just a day later. How unusual is that the president kind of coming out and saying, hey, I think the CEO of this company should step down? My colleagues and I have been talking to some business professors, and they're saying it's unprecedented in modern U.S. presidency for the president to weigh in on the CEO of a private American corporation. Trump's demand comes at a time when the U.S. government is counting on Intel to lead a revolution in American chip making.

He is implying that there's a trust problem with the head of America's most important chip manufacturer. Can we trust this guy to lead America's most important chip company? That's the issue right now. Welcome to The Journal, our show about, about money, business, and power. I'm Annie Minot. It's Wednesday, August 13th.

Coming up on the show, why Intel CEO became a target for President Trump. Before Trump trothed, you may have never heard of Lip Bhutan, but in the tech world, he's a big deal. Tan is 65, with connections all over the world. He's a naturalized U.S. citizen of Chinese ancestry, who was born in Malaysia and raised in Singapore. To understand Lipputon, I think you have to understand Singapore, which is where I'm talking to you from right now. And anybody who's been here knows it's a really unique place.

It's a former British colony. It's English-speaking. But most of its people, like Tan, are of Chinese descent. So it's kind of like East Meets West. Tan moved to the U.S. in the 1980s, and his global background served him well as he got his business career off the ground. I watched the speech with him, and he said, well, I wanted to ask myself, what kind of impact can I make? What can I bring to the table?

And I said, I want to be an impact player, and what can I offer? And I come from Asia. And I said, okay, the best way I can do is to help U.S. portfolio to go to Asia. And he concluded, you know, with my background from Asia, but being in America, I can bring U.S. investors to Asia. And on the flip side, I can help Asian companies go global. And that's where his story begins. Tan would connect American investors with up-and-coming Asian companies. His vehicle for doing that would be his venture capital firm, Walden International. So he starts his venture capital firm in the 1980s.

And then in the 1990s, that's when China is opening up. It's trying to reform from a communist country to a more capitalist one. So he's really early to this. He is early, yeah. In fact, in 1993, the Chinese government invites Tan to go to China and introduce the idea of venture capital to China. He's like one of the first people there.

Just like, hey, guys, here's what this is. Let me walk you through it. Exactly. And this is the time when the U.S. is really open to the idea. President Clinton's in charge of the U.S. And he's thinking, okay, let's help China, you know, move along and hopefully become a more open for our capitalist society. So he's there in the 90s.

And because he's there so early, he gets to see everything from the ground up. Through Walden, Tahn got to invest in a lot of Chinese tech companies, like Sina, which owns the Chinese social media site, Weibo. And Tahn also got involved in funneling money and know-how to a burgeoning new industry in China, computer chips. Tan became so influential in the chip world, people started calling him Mr. Chip. He got that name from his peers, because specifically of what he did in China, he provided invaluable mentorship and just business advice. and as well as money to these chip startups that eventually became some of the most important in China.

They include the company that's the biggest physical manufacturer of chips in China. And what is that company? Have I ever heard of it? You probably haven't heard of it. It's not really big outside China, but it's one of the biggest in the world. It's called SNCC, and it does the hard and complicated job of building these big factories

that physically manufacture your computer chips. All that experience made Ton attractive to Intel, which, at the end of last year, was looking for a new leader. The company had fallen on hard times. Intel needed someone who could return the company to its former glory, when its chips were the gold standard for computer processing. When I was a kid in the 90s and 2000s, I remember going to Best Buy and looking at all the computers I wanted to buy,

and they all had that sticker on them, right? Intel Inside. Intel Inside, exactly. So they were doing great until about two decades ago. And to understand what happened there, you kind of have to understand how the chip industry evolved and how Intel didn't. Intel built its reputation as a company

that both designed and manufactured its own computer chips. But as chips got more advanced, companies started to specialize. For example, a company like NVIDIA would design a chip, and then another company would make that chip. Right now, the two most prominent chip makers are Samsung and TSM, are Taiwan Semiconductor manufacturing company.

But Intel kept doing both. So Intel is still vertically integrated. They still designed the chip, and they still manufactured a chip. And as a result, they kind of got inefficient at doing both. So over the past two decades, they missed out on making great chips for smartphones. And they missed out in making chips for AI. They just made, like, computer chips. And that's the reason it's been struggling a lot.

I mean, last year, it lost $13 billion in its business of making chips. Intel shares plunging this morning on track for its largest. decline since September of 2000. But Intel's downward spiral hasn't just been bad for the company's shareholders. It's also been bad for the U.S. government, which needs Intel. That's because the company still manufactures chips in the U.S. And increasingly, having a secure domestic supply of chips is seen as a matter of national security. Artificial intelligence is used to simulate nuclear weapons, how to make a fight,

jet, how to make a missile, how to spy. And what powers artificial intelligence? Those are cutting-edge computer chips. And the problem now is that most of the world's cutting-edge chips are physically manufactured in Taiwan, as well as South Korea. China's threatening to take over Taiwan by force. And South Korea is still technically at war with North Korea. So the US government is thinking, uh-oh, if something happens to those two countries, we're not going to be able to make the best computer chips. We're not going to be able to have the best artificial intelligence we might not be able to win a war. So at the same time that this company is struggling,

in some ways it's more important to the U.S. than ever. Exactly. Until's not doing great financially. It's losing a lot of money. But it's also, it could be America's best hope to having chips made in America in case something happens to our trading partners. With that in mind, the U.S. government has given billions of dollars in subsidies to Intel

to grow domestic chip manufacturing. In 2022, Intel announced it would build a new chip-making plant in Ohio. All of this would be part of the challenge for Intel's new CEO. And what was the reaction when Intel brought in Mr. Chip-Liputon? Oh, it was like, it was like a public holiday in Santa Clara. That's where Intel is based. Their stock rose at 13%.

I mean, they found the guy. They found Mr. Chip. And they thought, well, if anybody can save the company, it's Lip-Butan. But so far, turning Intel, around has been an uphill battle. And not just because of the president's post. That's next. I'm excited to lead Intel at this defining moment in our history.

Lip Butan started as CEO of this defining moment in our history. Flip Bhutan started as CEO of Intel in March, and he had a lot of work to do. I also fully recognize it won't be easy. It had been a tough period for quite a long time for Intel. We fell behind on innovation. He had this idea that, okay, this is not great. We both design chips and we manufacture chips.

But at the same time, the U.S. government is banking in us, and they've literally given us money, subsidies, to build factories to make chips in America, we should stay the course and keep on doing that. Tahn's plan was to get better at both parts of Intel's chip business, designing and manufacturing, and to raise money to support that goal. But not everyone on Intel's board was behind Tahn.

The chairman of Intel has other ideas, and he thought, oh, man, making chips is losing so much money. Let's get out of that business. According to the journal's reporting, Intel's board has stymied Tons' efforts. to raise money from Wall Street investment banks. Board members also slow-walked a potential deal that Tan had supported to acquire an AI company to help Intel compete with rivals like Nvidia.

In a statement, Intel said its board and management team are aligned on the company's strategy, and quote, regularly and actively engage in thorough discussions and deliberations. Can you imagine he just got hired a CEO of Intel five months ago? And on one hand, his boss, the chairman of Intel, is thinking, I don't like your strategy. We should get rid of this really big part of our business. And then on the other hand, the boss of America is saying Intel needs to get rid of a CEO. I can't imagine what that's like.

Turning around Intel was challenging enough. But then came Senator Tom Cotton's letter, raising questions about Ton, and Trump's demand that he resign. It's not clear what put Ton on Cotton and Trump's rating. But just a week before Cotton and Trump's social media posts, there was an announcement about a company that Tan once led. That company is called Cadence Design Systems. It designs hardware and software for chipmakers. Tan was its CEO for 12 years.

Cadence came out and said, we just reached a settlement with the Justice Department. We pleaded guilty to illegally selling prohibited technology to a Chinese military university. And the Justice Department said that this university was known to simulate nuclear explosions and other military activities. According to the Justice Department, Cadence had been illegally helping an American adversary, and the company had done it while Tan was at the helm. These illegal activities happened during his tenure as CEO of Cadence. So there's still some questions about what Tan exactly knew about this illegal activity

if he knew anything about it at all. Cadence agreed to pay the Justice Department $140 million. Its current CEO said that it was in the best. interest of all parties to reach a settlement. Senator Cotton raised the cadence issue in his letter to Intel, but he also pointed out something else, Tahn's long history of investing in Chinese chip companies, companies that could be considered Intel's competition. Cotton wrote that Tahn, quote, reportedly controls dozens of Chinese companies and has a stake in hundreds of Chinese advanced manufacturing and chip firms.

What do we know about that? Is that true? We know that starting in the 90s, he did invest in a lot of important Chinese chip companies. He served on the board for 18 years of one of the most important. It's called Semiconductor Manufacturing International Corporation. Right, smic. Yeah, which the U.S. considers kind of a threat now. When he became CEO of the last company Cadence, he did give up a lot of day-to-day control of his venture firm. So it's unclear how closely involved he is today with his investments from his venture capital firm.

Despite these accusations, Intel has stood by Tahn. In a statement, Intel said Tahn and the company are making investments to align with Trump's America First Agenda, and are, quote, deeply committed to advancing U.S. national and economic security interests. On Monday, Tahn visited the White House to speak with the president. What do we know about what Tahn was hoping to accomplish as he went into that meeting? What Tan said beforehand that he wanted to tell the Trump administration that basically, you can trust me. He made a clear point of saying, the U.S. has been my home for 40 years, and I love it. So he's trying to show that he's a patriotic American and that the Trump administration can trust him to lead one of America's most important tech companies.

After the meeting, it wasn't yet clear if Tan had succeeded. In a post on truth social, Trump didn't rescind his call for Tan to resign. But he did call Tan's success and rise an amazing story and said that Tan would continue conversations with the president's cabinet. Intel's stock jumped 2% after that post. One thing I was thinking about as I was just processing all this is that the U.S. is now becoming more like China in a couple ways. It's literally giving subsidies to companies like Intel. And the second thing is that the president, President Trump, is becoming more and more assertive with its companies. This is what Xi Jinping, the leader of China, has done in China.

He's sidelined Chinese tech companies, CEOs that he doesn't like or don't get along with the program. And it seems like it's happening in the U.S. now, too. What does this whole incident say to you about kind of where we are with the U.S.-China tech rivalry? The U.S. and China are in this superpower conflict, and it shows that technology and computer chips specifically are very important to this battle.

The U.S. and China have been in this tech-hold war for. about eight years now. You know, every year or two there's been something unprecedented. You know, the U.S. trying to kill a Chinese tech company called Huawei because they thought they were spying and they also didn't like the progress

that was making with his own computer chips. The U.S. banning exports of chips to China from NVIDIA, other places, right? So this is just the latest twist and turns. So I can't even predict what's going to happen next. You know, we're running out of superlatives to discuss what's happening with technology and the U.S.-China relationship.

That's all for today, Wednesday, August 13th. The Journal is a co-production of Spotify and the Wall Street Journal. Additional reporting in this episode by Lauren Thomas, Amrith Ramkumar, Yangshya, and Gareth Vipers. Thanks for listening. See you tomorrow.